Is Microchip looking to buy Supertex?

SAN JOSE, Calif. -- Microchip Technology Inc. is involved in a proxy fight with Atmel Corp. But now, is Microchip Technology also looking to buy Supertex Inc.?

According to a filing with the U.S. Securities and Exchange Commission (SEC), Microchip disclosed that it owns a 5.4 percent stake in Supertex, a publicly-held mixed signal semiconductor manufacturer.

Over the last 90 days, ''Microchip has purchased 594,300 shares in the open market and the remaining 103,100 shares were acquired through the exercise of put options sold by Microchip. In total, Microchip spent $14.7 million on the purchase,'' said Daniel Amir, an analyst with Lazard Capital Markets LLC.

''What is going on now? We think that the difficulty in the bid for Atmel frees Microchip to look at potential other acquisitions,'' he said in a report. ''Supertex, with a high cash position and strong long-term growth drivers (Ultrasound, LED, and a company still run by a founder with no succession plan), could be an attractive target for Microchip's growing portfolio.''

Microchip has apparently not completely given up on the idea of acquiring rival Atmel. Earlier this month, Microchip announced a slate of seven new nominees to Atmel's board of directors to be proposed at Atmel's next annual shareholder meeting.

But Microchip recently added that, in light of current economic conditions and a semiconductor industry downturn, Microchip (Chandler, Ariz.) is still undecided about pursuing an acquisition of Atmel.

Earlier this year, Microchip and On Semiconductor Corp. proposed a $2.3 billion takeover bid for Atmel. The proposal was rejected by Atmel's board, prompting Microchip and On Semi to say they would take the case directly to Atmel's shareholders through a proxy vote.

But On Semi reversed course last month and bowed out of the fight for Atmel, citing deteriorating market conditions. At the time, Sanghi said Microchip would continue to evaluate alternatives for pursuing a transaction without On Semi.

Now, Microchip could be setting its sights on Supertex (Sunnyvale, Calif.). The chip maker is focused on high-performance analog and high voltage interface products for use in the medical, flat panel display, automotive, industrial electronics and telecommunications industries.

Supertex also provides foundry services. Its 6-inch, sub-micron wafer fab provides a broad offering of CMOS and CCD technologies as well as MEMS capabilities.

The company's sales for the three months ended Sept. 27, were $23.5 million, a 6 percent increase compared to $22 million for the same period of the prior fiscal year. Net sales increased 3 percent from $22.8 million when compared to the quarter ended June 28.

''In recent years, the medical ultrasound systems market has experienced significant growth in the transportable and hand-carried units,'' according to the filing. ''These high-performance, portable, low-cost systems are also accelerating the proliferation of ultrasound imaging applications in the medical disciplines other than the traditional clinical prenatal applications, such as cardiovascular and organ scans.''